"Scrapping air tax would give Britain's airlines a £16bn boost"

From yesterday's Evening Standard:

Scrapping the “destructive” tax on air tickets would give a desperately needed £16 billion boost to the British economy and help create up to 60,000 jobs, a report claims today.

Ditching air passenger duty, which can be as high as £184 for a business-class flight to Australia, would encourage airlines to expand their route networks, increase tourism to the UK and foster business links with the rest of the world.

The study, from consultants PwC, was commissioned by British Airways, easyJet, Ryanair and Virgin Atlantic, which have all campaigned against the tax since its introduction in 1993.

Ahem.

1. The airlines are always wailing that we need more capacity and more runways, because our major airports are running at full capacity (and it would appear that they are).

2. Therefore, whatever happens to ticket prices and APD, they will not be able to "expand their route networks, increase tourism to the UK".

3. We also happen to know, from general observation and economic theory, that APD is not added to the price paid by the passenger, it comes off the price received by the airline. So lower APD = same total ticket price.

4. If it were the case that airlines ran on very tight margins, then they would have to increase ticket prices by the amount of APD (or else they'd be losing money on each flight).

5. But if they were running on such tight margins, then the "slots" (the simple right to fly from A to B once a day) would not be so valuable. And they are very valuable (depending on where A and B are).

6. So we conclude that while APD is not a very good tax at all, it does not make any difference to anything in most cases (yes there is some idiotic re-routing going on whereby people fly from the UK to Amsterdam or Paris to take their connecting flight). Better would be a flat tax for each take-off or landing and best of all would be to auction of the landing slots every year.

"Smokers cause expensive diversion after lighting up on bus from Halifax"

From The National Post:

Three people were arrested after lighting up cigarettes aboard a 508 bus from Halifax bound for an afternoon's shopping in Pudsey, forcing the bus to halt prematurely in Dudley Hill, a spokesman for West Yorkshire Transport said.

Two members of a family of four — consisting of two older adults, a 22-year-old and a 16-year-old — began smoking on the back row upstairs on the 11.40 service, due to arrive at Pudsey Dawson's Corner at 12.15, and three family members later became “verbally abusive”, said Daryl McWilliams, the vice-president of media relations for the authority.

Due to safety regulations, the bus was required to halt at the next stop, Fenby Avenue/Cutler Heights Lane in Dudley Hill, and the disruptive passengers were taken into custody by local police, he added.

He did not know what the offending passengers’ nationality was, but said they had their travel documents taken away. Mr. McWilliams expected them to appear in court on Monday.

Home-Owner-Ism: There's always a happy ending.

Spotted by Bob E in The Guardian:

In autumn 2007, in the days just before Northern Rock began to crumble, Nick Scott and his fiancee Hayley Thomas bought a three-bed semi in Warrington, Cheshire. It cost £100,000 but needed another £8,000 for renovation. The words "credit crunch" were yet to enter common usage, and lenders were still being easy with mortgages. The couple managed to obtain a 100% interest-only mortgage on the property, which set them back £450 a month in repayments.

Nearly six years on, the property is worth substantially less than the couple paid for it. At best, Scott thinks they could get around £70,000, which would leave them £30,000 out of pocket, an amount he says there is no way they can afford.

So, really up that famed creek of legend then..?

Fortunately for Scott, a combination of falling interest rates and a buoyant rental market came to his rescue.

"I decided to make the best of it by renting the house out. It cost about £350 administration fee for the lender to agree for me to operate it as a let, but it's now getting £550 per month. Because the base rate has been at 0.5% for almost three years, my monthly mortgage has been only £150 for all of that time. The rental market is really strong. I didn't even have to put a board outside – the property went on the first viewing," he says.

... or investors could just invest directly in businesses.

From City AM:

But banks warned that hanging this [empty] threat over the industry cannot be good for long-term prosperity.

"This will create uncertainty for investors, making it more difficult for banks to raise capital which will ultimately mean that banks will have less money to lend to businesses," said Anthony Browne, chief of the British Bankers’ Association.

"What banks and business need is regulatory certainty so that banks can get on with what they want to do, which is help the economy grow. This decision will damage London’s attractiveness as a global financial centre."

The added irony being that of all bank lending, less than ten per cent is to "businesses", ninety per cent of it is mortgages secured on land.

Nick Clegg issues hasty correction to misreporting of a speech he gave in January

Spotted by Bob E at Huff Post:

Nick Clegg has said he's delighted that no way will Chris Huhne return to the cabinet now that the former energy secretary has been convicted of perverting the course of justice related to a speeding offence.

The Lib Dem leader told journalists in Westminster on Thursday that Huhne was a "formidable and accomplished liar" who he wanted to see "banged up" and that there was no way Huhne could ever expect to be back at the "top table" of British politics.

Clegg's desire to have Huhne back inside a correctional facility may in part be motivated by the view that it is better to have him inside having nasty things done to him, than outside it doing nasty things to those in the Cabinet.

"The extreme geography of income wealth"

To continue the theme of the previous post ( via City AM) HMRC's Table 2.5 gives a breakdown of Income tax liabilities by income range for 2012-13:

Top 0.1%
Incomes over £500,000, total incomes £44.8 billion, total income tax paid £19.7 billion

Rest of top 1%
Incomes £150,000 to £500,000, total incomes £60.7 billion, total income tax paid £22.5 billion.

Rest of top 10%
Incomes £50,000 to £150,000, total incomes £195.5 billion, total income tax paid £46.6 billion.

Next 45%
Incomes £20,000 to £50,000, total incomes £409 billion, total income tax paid £56.3 billion.

Bottom 45%
Incomes £8,105 to £20,000, total incomes £191.8 billion, total income tax paid £13.9 billion.

Non taxpayers
Approx. 40% of adults with taxable income of £8,105 or less.

Of course, income tax alone is only a quarter of all taxes paid, but assuming that taxes on income and personal wealth generally were halved, the top one per cent would have no problems paying the LVT on their houses based on current site-only rental values (approx. 3% of current selling prices), which would be somewhere in the region of £20 billion a year.

"The extreme geography of property wealth"

From Savills:

[Land and buildings in] just ten London boroughs – Westminster, Kensington & Chelsea, Wandsworth, Barnet, Camden, Richmond, Ealing, Bromley, Hammersmith & Fulham and Lambeth - have an aggregate value equivalent to the total value of [land and buildings in] Scotland, Wales and Northern Ireland combined at just over £550 billion. Even within London, wealth is increasingly focused in core central and high value boroughs. The richest borough – the City of Westminster – has just 121,600 units, with a total value of £95 billion, more than twice the value of Edinburgh and almost three times that of Bristol.

And beyond the capital the analysis highlights some pockets of very concentrated housing wealth. For example, the high value commuter hotspot of Elmbridge in Surrey (which includes Cobham, Esher and Weybridge) has a housing stock value of £31 billion, more than that of Glasgow (£29bn), while that of Windsor and Maidenhead (£23bn) is slightly more than that of Cardiff.

Via Rumble at HPC who spotted it in the FT.

Pret withdraws 'Mohammed' crisps following fire bombings

Spotted by Jay at the BBC:

Sandwich shop chain Pret A Manger has withdrawn a new "Prophet Mohammed" brand of crisps following a spate of fire bomb attacks at its outlets.

The firm, with about 350 shops in the UK, launched the spicy tomato crisps - based on a recipe mentioned in the Koran - last week. This prompted a series of arson attacks from Muslims, because the packaging was seen as an offensive reference to their prophet.

A company spokesman said it had noted complainants' "strength of feeling" and withdrawn the product to avoid offence.

"It didn't take many burned out shops for us to get the message," he said. "It's the strength of feeling that's behind them that's important."

He added: "For the sake of a particular flavour of crisps, we don't want our customers and staff being burned to death."

Modern Alchemy

The pensions and insurance companies explain how to magically transform bad assets in to good ones in today's City AM:

The firms instead suggest the Bank of England use QE money to buy overvalued PFI and infrastructure assets from banks then sell them to pension funds at a lower price, unburdening banks and giving pension funds a good long-term asset in one action.

The notion that the government has some magical spare QE money sloshing around is infuriating enough - the government does not hold QE money as an asset; the government (or some department of the central bank) owes QE money. It has already spent it on buying back government bonds.

If we ignore that bit, what we get is a gift of free money to banks (overpaying for assets) and another free gift for the insurance companies (underpaying for assets).

By subtraction, UK government borrowing will go up. Of course this "unburdens" banks, in the same winning £1 million in the Lottery would unburden you or me.

But why are those "good long-term" assets not already "good long-term assets" from the point of view of the banks?

Maybe you bought some shares when they were 73p and I bought them today for £1.23. We own the same shares, they are as good as each other. The fact that you paid less than I did does not make the shares any better or any worse, does it?

And those "good long-term assets" like "PFI and infrastucture assets" are only worth what they are worth because the government is subsidising them. They themselves are pushing up public sector debt.

So what these geniuses are asking for is another two layers of subsidy (and increased government debt) to people who are already entitled to one layer of subsidy (the PFI or infrastructure assets, which themselves increased government debt).

FFS.

H/t Stillthinking at HPC.

Wake up and smell the revolving door

Apparently random snippets compiled by Bob E.

Office of Tax Simplification 17 January 2013:

The OTS is looking to recruit experienced tax professionals on short term [unpaid] secondments for its review into employee benefits and expenses. Further details of the role can be found in the job specification below. The closing date for applications is 15 February 2013. Please refer to the employee benefits and expenses page for full terms of reference for the review.

Daily Mail 30 January 2013:

Britain's top taxman – who stepped down after he was accused by MPs of lying – has been hired by HSBC to advise it on honesty, it emerged last night. In an explosive move, the bank has appointed Dave Hartnett, the former head of HM Revenue and Customs, as an adviser to ‘enforce the highest standards’ at the firm.

Daily Mail 1 February 2013:

It also emerged that the companies all send senior tax partners to HMRC or the Treasury to help draft new legislation. When they return to their firms, the companies use the new-found knowledge of loopholes to devise new ways for corporations to avoid paying full dues to the taxman.

HM Revenue and Customs, Corporate Governance:

HM Revenue and Customs' (HMRC) Non-Executive Directors are senior business figures from outside the department who bring a diverse mix of expertise and skills from across both public and private sector...

Their "non-executive directors" include:

Ian Barlow, who spent 37 years with KPMG
Colin Cobain, who was formerly Chief Information Officer of Tesco
Philippa Hird, who was until recently Group Human Resources Director of ITV
Volker Beckers, who has been Group Chief Executive of RWE Npower since January 2010
Norman Pickavance, who was most recently Group HR and Communications Director of WM Morrisons Supermarkets Plc*
John Whiting, who was a tax partner at PricewaterhouseCoopers for 25 years

* Why do they give the full name of this company, but not for the others?